Commission revision on Late Payments does not go far enough

08 April 2009
by intrumjustitia -- last modified 08 April 2009

Intrum Justitia, Europe's leading Credit Management Services company, commends the European Commission's proposal to amend the existing Late Payment Directive and agrees with EU Enterprise Verheugen as describing late payments as a "disease". Intrum Justitia also agrees that SMEs are hard hit by the crisis and the problems of companies' liquidity in a time of the credit crunch must be addressed by the Commission.

However, in the sphere of B2B the Commission does not go far enough when it suggests that businesses are entitled to claim compensation and interest when not paid on time. In the view of Intrum Justitia, this will not effectively strengthen the existing Late Payment directive which was the original goal and will not improve the situation for SMEs. Likewise the fear that many SMEs exhibit when pursuing payments has not been addressed either. It is widely known that offending customers with punitive measures to obtain payment is dreaded by SMEs.

On the other hand Intrum Justitia welcomes the introduction by the Commission in the revision of making it binding for the public sector to pay their private suppliers (SMEs) within 30 days. The consequences for not paying on time would force the public sector to pay interest, compensation for recovery costs and a flat-rate compensation of 5% of the amount due. As this new rule is binding the Commission has the legal basis and instrument to take action if this is not observed.

Verheugen did not acknowledge that in the business to consumer payments area huge problems do also exist and Intrum Justitia regrets that this aspect was not introduced. Consumer over-indebtedness also seriously affects the livelihood of SMEs and is a growing problem.

Verheugen wants the proposal to go through a fast-track procedure so that it can be adopted by the end of the year or early next year. Intrum Justitia supports this and also agrees with the Commission that Member States must take their part, once applicable, in ensuring that information and transparency on the Directive is increased and explain the rules of the Directive.

Intrum Justitia is Europe's leading Credit Management Services company for good reason: our offer means better business for both clients and debtors.

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